Anyone trading FOREX? Sensible advice wanted.
Discussion
Hi All,
I'm soon to submit tender prices for goods that I buy in Euro and sell in GBP. The tender covers 2012 and I am looking to introduce a FOREX risk-mitigation factor into my calculations. I appreciate that this is literally the billion-dollar question but my tired degree-level economics does not give me much confidence in predicting what on earth will happen to exchange rates in the next 13.5months. Golden nuggets very welcome.
Cheers,
TC
I'm soon to submit tender prices for goods that I buy in Euro and sell in GBP. The tender covers 2012 and I am looking to introduce a FOREX risk-mitigation factor into my calculations. I appreciate that this is literally the billion-dollar question but my tired degree-level economics does not give me much confidence in predicting what on earth will happen to exchange rates in the next 13.5months. Golden nuggets very welcome.
Cheers,
TC
Hehehehehe. If anyone knew, they'd be too busy sunbathing on their yacht to reply. The world economy is shot to s
t, Europe is doing a good impression of the Titanic shortly after it hit something icey; in theory, it makes sense to sell Euros against the Pound even as France and Germany desperately pump more money into wasters such as Greece and Italy (and then Portugal, Spain and Ireland?) but what happens when Europe drags Britain with it? If you are able to hedge successfully, then after reducing your company's risk, I would bail out and start trading as you certainly aren't paid enough working there with your trading skills.
In other words, I would just take a risk and don't bother hedging. If I knew otherwise, I'd mortgage my house out 100% and do the trade of my life, knowing I'll be a multi-millionaire in 2013.
t, Europe is doing a good impression of the Titanic shortly after it hit something icey; in theory, it makes sense to sell Euros against the Pound even as France and Germany desperately pump more money into wasters such as Greece and Italy (and then Portugal, Spain and Ireland?) but what happens when Europe drags Britain with it? If you are able to hedge successfully, then after reducing your company's risk, I would bail out and start trading as you certainly aren't paid enough working there with your trading skills.In other words, I would just take a risk and don't bother hedging. If I knew otherwise, I'd mortgage my house out 100% and do the trade of my life, knowing I'll be a multi-millionaire in 2013.
I'd be looking at a Forward Rate Agreement, or "Forward" if I were you. If you want to take a bit of a punt, go for an "Option."
As mentioned, your corporate banker should be able to help.
The Forward will hedge you against loss or gain from movements in the currency, so you will know exactly how much you will exchange at the point defined in the contract.
As mentioned, your corporate banker should be able to help.
The Forward will hedge you against loss or gain from movements in the currency, so you will know exactly how much you will exchange at the point defined in the contract.
Tim.C said:
Good shout that - "Yes, Hello. Could I speak with Bob Diamond please?"
Yet another person who does not seem to understand the difference between the word corporate and and the word investment.Do you actually run a business?
You see they tend to have a banker associated with the account, typically titled as a corporate or business banker.
Sorry for trying to be of help. Tit.
ellroy said:
Yet another person who does not seem to understand the difference between the word corporate and and the word investment.
Do you actually run a business?
You see they tend to have a banker associated with the account, typically titled as a corporate or business banker.
Sorry for trying to be of help. Tit.
Ah, yet another case of the nuances of non-verbal communication being lost on an internet forum. You misunderstood what I was trying to say. Your suggestion was genuinely very useful; I was so caught up in the model I'd constructed that I'd ceased thinking about those who could help i.e. my business manager at Barclays. Do you actually run a business?
You see they tend to have a banker associated with the account, typically titled as a corporate or business banker.
Sorry for trying to be of help. Tit.
The BD reference was more in response to the search for the type of person who could determine what might happen - and yes, I appreciate that the reference is not perhaps 100% correct. I do, as it happens, run a business and I do understand the difference between corporate and investment. I also think I know the difference between a problem born out of miscommunication and an arrogant c*ck , so you're forgiven.
As louiebaby mentioned, a forward contract is the most simple route. You agree an exchange rate today, based on today's rate, but for delivery at some time in the future. The advantage is that you know what rate you will be getting when your project comes to fruition and your costs and profit margin are fixed.
Considered downside is that if the market moves favourably in the meantime i.e. after you have booked your trade, you don't benefit from that movement. As you are doing this as a commercial project rather than as a currency punt, this should not be a concern.
Considered downside is that if the market moves favourably in the meantime i.e. after you have booked your trade, you don't benefit from that movement. As you are doing this as a commercial project rather than as a currency punt, this should not be a concern.
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